Book Notes: New Deal or Raw Deal?

This is the first entry for our new book in the Book Notes section of Red State. I decided to go with New Deal or Raw Deal: How FDR’s Economic Legacy has Damaged America by Burton Folsom, Jr. because it seems very relevant for today. President Obama came into office on a spending spree. The Democratic controlled Congress and Senate showed no desire to reign in any of his spending. The current Congress seems only slightly more willing to cut back on spending, but still only slightly.

So the question as we read Mr. Folsom’s book is this: How did unprecedented spending affect America during the FDR presidency. Much like today, there was “spiraling national debt,” threatening our nation. However, in the 1930’s, it appeared to be entirely from the current administration. As Mr. Folsom writes:

The United States had budget surpluses in 1930 and 1931, but soon government spending ballooned and far outstripped revenue from taxes. The national debt stood at $16 billion in 1931; by the end of the decade the debt had more than doubled to more than $40 billion.

What did we get for this massive spending? Unemployment in1931 was 16.3 percent. By 1939, FDR’s spending was able to get that unemployment UP to 17.2 %.

Not only was it unprecedented, but many of today’s progressives feel FDR didn’t spend enough. In discussing a future historian of FDR, Mr. Folsom writes:

What’s interesting is that most of these complaints are that Roosevelt should have done more than he did, not less. “The havoc that had been done before Roosevelt took office” Leuchtenburg argues, “was so great that even the unprecedented measures of the New Deal did not suffice to repair the damage.” Therefore, to Leuchtenburg and others, the New Deal was only “a halfway revolution” that should have gone further.

Thus we hear the opinion of future generations of historians and progressives that would look back at FDR. However, the most damning quote in this first chapter is not from a professional historian, but from a close friend and confidant of FDR’s. Henry Morgenthau, Jr. was not just FDR’s secretary of treasury, he was one of the only people who could tell FDR ,”…he was wrong and get away with it”. This man was in FDR’s inner circle and would have known as well as FDR the results of the incredible spending. Yet, when speaking to other Democrats, he candidly remarked:

We have tried spending money. We are spending more than we have ever spent before and it does not work. And I have just one interest, and if I am wrong…somebody else can have my job. I want to see this country prosperous. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises…I say after eight years of this Administration we have just as much unemployment as when we started…And an enormous debt to boot!”

As much employment as when the President started, and an enormous debt. Sound like any Democratic President you know?